The GBP/USD pair remained stable around 1.2560 during the Asian trading session on Friday, following gains in the previous session. The pair appreciated after US President Donald Trump’s decision to delay the implementation of reciprocal tariffs, while the US Dollar (USD) continued to weaken due to falling US Treasury yields, despite ongoing concerns about a global trade war.
The US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, extended its losses for a fourth consecutive session, trading near 107.00. At the time of writing, the yields on the 2-year and 10-year US Treasury bonds stood at 4.31% and 4.53%, respectively.
US Core Producer Price Index (PPI) inflation rose to 3.6% year-on-year in January, exceeding the expected 3.3%, though it was slightly below the revised 3.7% (previously reported as 3.5%). This data reinforced expectations that the Federal Reserve will delay rate cuts until the second half of the year. Persistent inflation pressures could further support the outlook for the Fed to maintain interest rates in the range of 4.25%-4.50% for an extended period.
Market participants are now focusing on the release of US Retail Sales data, the final major economic report of the week. Expectations are for a slight contraction of -0.1% in monthly Retail Sales, following a 0.4% increase in the previous month.
In the UK, data released Thursday showed the economy grew by 1.4% year-on-year in Q4 2024, up from an upwardly revised 1.0% in Q3 and surpassing market expectations of 1.1%. This marks the fastest GDP growth since Q4 2022. For the full year 2024, the UK economy expanded by 0.9%, up from 0.4% in 2023, driven by a 1.3% increase in the services sector, compared to 0.4% growth the previous year.
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